Federal agents arrested the co-founder of Super Micro Computer (Nasdaq: SMCI) on Thursday, charging him with orchestrating a years-long scheme to smuggle billions of dollars in Nvidia-powered servers to China in violation of US export control laws.
Yih-Shyan “Wally” Liaw, 71, a US citizen and senior vice president of business development at Supermicro, surrendered to federal agents in California. A Manhattan federal court simultaneously unsealed an indictment charging Liaw alongside two associates: Ruei-Tsang “Steven” Chang, a sales manager at the company’s Taiwan office who remains a fugitive, and Ting-Wei “Willy” Sun, a third-party contractor and alleged “fixer” whom agents also arrested Thursday.
Prosecutors allege that between 2024 and 2025, Liaw and Chang directed executives at an unnamed Southeast Asian company to place purchase orders for $2.5 billion worth of Supermicro servers — assembled in the US and containing Nvidia’s most advanced AI chips, which carry strict export controls barring their sale to China without a license.
The defendants routed the servers from US assembly lines through Supermicro’s Taiwan facilities to the Southeast Asian intermediary. From there, the indictment alleges, the group engaged a logistics company to repackage the servers into unmarked boxes before delivering them to their true destination: China. The Associated Press reported that at least $510 million worth of servers reached Chinese buyers.
To avoid detection, the defendants allegedly fabricated documents and staged photographs of non-functional dummy servers at the Southeast Asian company’s facilities, deceiving Supermicro’s compliance auditors into believing the equipment remained at its supposed destination.
Prosecutors charged Liaw, Chang, and Sun on three counts: conspiracy to violate the Export Control Reform Act, which carries a maximum sentence of 20 years; conspiracy to smuggle goods from the US; and conspiracy to defraud the US, each punishable by up to five years. Authorities released Liaw on bail following his arrest. They held Sun, a Taiwanese national, pending a detention hearing. Chang remains at large.
“Diversion schemes like those disrupted today generate billions of dollars in ill-gotten gains and pose a direct threat to US national security,” said Jay Clayton, the US Attorney for the Southern District of New York. “Crimes involving sensitive technology must be met with swift action — otherwise the law is meaningless.”
The indictment does not name Supermicro as a defendant. The company placed Liaw and Chang on administrative leave and terminated its relationship with Sun, effective immediately. “The conduct by these individuals alleged in the indictment is a contravention of the company’s policies and compliance controls, including efforts to circumvent applicable export control laws and regulations,” Supermicro said in a statement.
Super Micro Computer shares fell as much as 14.6% in after-hours trading following the news. Liaw personally holds approximately $464 million in SMCI stock, according to FactSet.
Liaw co-founded Supermicro in 1993 alongside CEO and chairman Charles Liang. The San Jose, California-based company supplies AI server infrastructure to major technology customers and counts Nvidia among its key hardware partners.
The case is the highest-profile prosecution to date targeting the alleged smuggling of restricted US artificial intelligence technology to China.
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